Happy New Year one and all. And what a year 2023 could be for the messaging industry….if we do things right. We at Mobilesquared believe this is a pivotal year for business messaging and based on actions, developments and processes that are put in place throughout the course of 2023, will largely determine whether this industry is on the verge of unprecedented growth, or will continue to underperform (based on brand spend) compared to other channels.
Clearly, something isn’t quite right in the world of business messaging, because a clear disconnect has emerged between the number of messaging users and actual businesses investing in messaging, regardless of whether SMS or rich messaging. It’s our job as analysts to take a hard look at why this is.
If we look at A2P SMS, there were 5.59 billion unique mobile users (aka SMS users) at the end of 2022. Based on brand spend of $25.7 billion on A2P SMS throughout the year, annualised SMS ARPU stood at $4.63 (or $0.013 per day).
As a standalone channel, ARPU of $4.63 might be OK. But – as we have been doing so for a number of years now – if we compare that to mobile advertising, it has an annualised ARPU in excess of $70 per smartphone user (or $60 per unique mobile user). So this shows what can be achieved by other industries, especially when you consider that only around 7% of registered businesses are actually using A2P SMS.
Let’s face it, when mobile advertising added the “rich” element to campaigns it experienced an exponential increase in brand spend. Messaging is undergoing a similar path and rich messaging is becoming more available. But there is a very long way to go yet.
For instance, there were 4.5 billion unique rich messaging users globally at the end of 2022, with brands spending a total of $1.24 billion across every rich messaging channel, from RCS, to WhatsApp, LINE and WeChat and so on. That is an annualised average revenue per user (ARPU) of $0.28 or $0.00076 per day. Not much!
And to put that brand spend on rich messaging into greater context, just the increase in brand spend alone on SMS between 2022 and 2023 will be larger than the total cumulative spend on rich messaging in 2023.
As we mentioned at the start, there is a disconnect, a missing ingredient, and identifying what that is will be key to unlocking big brand spend on business messaging.
For the time being, it will be the industry developments across the major messaging channels that will potentially determine the outlook for the year ahead. As brands increase their spend in A2P SMS, the channel attracts more attention from the rogue element, with a greater threat from different fraud types, including Artificially Inflated Traffic and fake OTP traffic. In addition to that, there is the impact of international price increases to also consider.
Not surprisingly, the major behemoth traffic-generating brands are already looking for ways to stop OTP traffic via SMS, and elements of the industry are fuelling that fire. Our estimates for OTP traffic in 2022 suggested it accounted for between 30-40% of A2P SMS total traffic. If that spend goes onto other channels, that will cost the SMS industry between $7.71 and $10.3 billion a year.
As for RCS, this is a very big year for the channel, with some major announcements on their way. But these can be saved for a later date.
For now, we’ve had our top-line say, and you can have yours too. We are in the process of updating all of our messaging forecasts, so please get involved and share your views by completing one (or all) of our online surveys. You do not need to answer every question, but provided you complete the online survey by answering over 66% of questions, we will reward you with free top line channel data on a market of your choice (value £300).
Impact of fraud on A2P SMS
https://www.surveymonkey.co.uk/r/Messagingfraudsurvey2023
Expectations for the A2P SMS industry in 2023
https://www.surveymonkey.co.uk/r/a2psmsresearch2023
Expectations for RCS in 2023
https://www.surveymonkey.co.uk/r/RCSresearch2023
Expectations for WhatsApp in 2023
https://www.surveymonkey.co.uk/r/WhatsAppresearch2023
For the record, we have a view on what the missing ingredient is, but that is a discussion for another time.
Here’s to a hopefully great 2023.
nick@mobilesquared.co.uk